FHFA Extends Mortgage Forbearance to 15 Months

Struggling borrowers now get more time to pause their mortgage payments.

Millions of Americans have lost their jobs or struggled financially during the coronavirus pandemic, and that includes those who own homes. The good news is that there's been relief available to mortgage borrowers in the form of forbearance. And now, that relief is getting extended to help homeowners even more.

How mortgage forbearance works

When a mortgage is put into forbearance, the borrower does not have to make any payments for a preset period of time. Thanks to the CARES Act, which was signed into law in March of 2020 to provide coronavirus relief, all homeowners who request mortgage forbearance are eligible for it. Furthermore, borrowers were initially entitled to 12 months of forbearance under the CARES Act. But on Feb. 9, the Federal Housing Finance Agency (FHFA) announced that it would be extending forbearance to cover a 15-month period, giving borrowers even more of a break from making payments on their home loans.

An estimated 2.7 million homeowners have their loans in forbearance, according to the Mortgage Bankers Association. Some of those mortgages, however, may have been put into forbearance early on in the pandemic, which means that without the extension, they'd be coming off of forbearance very soon. Now, borrowers get a bit more breathing room, and that's important for those whose financial circumstances haven't improved since the start of the pandemic.

Should you put your mortgage into forbearance?

If you're having a hard time paying your mortgage, forbearance is a good bet, and you can still request it from your mortgage lender. During that time, your payments will be paused, and you won't be reported as delinquent on your mortgage to the credit bureaus provided you were current when your loan entered forbearance.

To be clear, your paused payments will not be forgiven at all. Rather, you'll need to catch up on them once your forbearance period comes to an end. However, your lender cannot force you to catch up on those missed payments in a single lump sum.

Generally, what will happen is that once forbearance ends, you'll either make more monthly payments to catch up on your loan, thereby extending your repayment period, or make a higher payment each month until you're all caught up. The specifics of how you'll make up those payments will depend on your lender, though, and that's information you should be given when you request forbearance in the first place.

You should also know that you're allowed to make mortgage payments while your loan is in forbearance -- you're simply not obligated to do so. If you can make a payment here and there, you'll have less to catch up on later.

Take all the relief you can get

If you're out of work, experiencing income loss, or dealing with other added expenses during the pandemic (for example, increased childcare costs due to schools not being open), then hitting pause on your mortgage could be a lifeline. And now, you can do so for 15 months instead of 12. That buys you even more wiggle room to get back on your feet and recover from the pandemic as best as you can.